Netflix added 1.54 million users in the last quarter and has confirmed that it is moving into the gaming space. The company views gaming as a new content category, comparing it to its expansion into original films, animation, and unscripted TV. Initially, the focus will be on mobile games with the expectation of a long runway of increasing investment and growth across all of its existing content categories. Considering that Netflix is nearly a decade into its push towards original programming, the entertainment mogul thinks the time is right to learn more about how our members value games.
Netflix finished the second quarter of 2021 with over 209 million paid memberships but added four million net new subscribers – two million less than the original forecast. The streaming giant bounced back with a new approach to its June quarter trading for 2021. With its head in the game, Netflix announced a spending of $8 billion in cash on content and the expectation for content amortisation to be around $12 billion for the entire year, including potential new games to be added to Netflix subscriptions at no additional cost.
By achieving its forecast, Netflix will have added more than 54 million paid net adds over the past 24 months or 27 million on an annualized basis over that period, which is consistent with its pre-Covid annual rate of net additions. Now, that’s what we define as a game-changing approach.
All Response Media viewpoint
Advertising in-game isn’t something that has ever really reached mainstream media plans, often the reserve of large, brand building campaigns. Now that almost all gaming systems are connected devices, there could be a time in the future where advertisers could sell directly to people in-game.
Netflix and the other streaming services are in a battle to secure users, with all of them avoiding an ad-funded option.
It will be interesting to see whether this changes as people with multiple subscriptions realise how expensive they are when adding them all up. Perhaps, this will be the trigger to opening up the ad-funded option.
The slew of impacts that this could deliver to the market would have an incredible deflationary effect on pricing.
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